Ranier and Andrew Gazdecki walk founders through five things to settle before acquisition talks: why you're selling, whether you'll stay post-deal, what buyer you want, what deal structure works for you, and how you'll show up. Writing down answers closes the gap between your expectations and their offer.
Chapters
You want to put yourself in the buyer's shoes. And so what are your acquisition goals? As a founder, you want to know ideally who your ideal buyer looks like. And then in terms of what your ideal exit looks like. If we go through the first part, why are you selling? So if you're retiring, you've got a new venture, financial reward, taking chips off the table, sellers, that's going to be the first thing that buyers ask you. It's like, okay, well, this looks like a great business. Why are you selling? So have a firm understanding and explanation of why you're selling. That's going to be probably the first question any buyer asks you. The second part, what life do you want post-acquisition? Again, the transition part. Are you open to staying for a period of time to help the buyer transition, or are you looking for a clean break? Is there like some sort of emergency you have to take care of? You have another venture to, to jump into as soon as possible? Help the buyer understand that because they're also going to ask you, okay, why are you selling and why are you looking to fully transition? And then how flexible are you? Because a lot of buyers, they want to know if you can help out with the transition. They want to make sure that there's a smooth handoff. They want to at least have their customers and contract agreements go through easy transition post-sale. The next part, what kinds of deals might get you there? So are you open to creative deal structures or prioritize cash, seller financing, an earnout, retained equity, or a combination of these things? Many, many deals can get really creative, and as a seller, you want to know exactly what is an ideal exit for you. Is it price? Is it timing? Is it the transition? You want to have a firm understanding of all of these things so that the buyer knows exactly what you're looking for and you can meet in the middle to have ideal transition and transaction for the both of you. Lastly, how can you convince buyers to offer the deal that you want? Well, first you need to know what you want. What's your ideal buyer profile? What's your ideal exit look like? And some of these points are key: being easy to work with, being honest, being prepared, being realistic about asking price, being responsive, and just asking. As a seller, you want to be upfront. This is why I'm selling. This is my ideal exit transition. This is my ideal cash amount at close, earnout, et cetera. You just want to be on the same page so that there's trust on both sides. You could have the most valuable business in the world, but if you're not easy to work with, if you're not prepared, if you're not 100% honest and buyer senses that, it's going to kill a deal. They're going to look at the 5 to 10 other deals that they're looking at because of any of these other points. So the main thing here, again, have a firm understanding of why you're selling, who your ideal buyer profile looks like, what your ideal transaction looks like. And then from there, you can meet in the middle with the buyer. And that's how you're going to have the smoothest exit to get you the best price, the best timing, best transition. For an acquisition. Anything to add there, Andrew?
I think you nailed it. I think one thing I would point out is also understanding how much of this is, again, closing the gap where a buyer may be on one side and you're on the other side where you want to exit the business. But really understanding what does that look like? Is it because you need to move on and start working on another company or you've already started a business? Just being able to articulate that can help buyers because that can help them structure the deal in a way that can help you accomplish those goals. So I think going through this exercise of outlining why you're selling, What life do you want post-acquisition? For example, the post-acquisition piece, are you even able to do a transition? If so, what does that look like? All of this can ultimately determine what type of offer you're going to receive. So that's why I think this is such good content where just by writing down all of these simple questions can really help a buyer understand what's going to work for you and what's not. So what I mean by closing the gap is for buyers, does the creative deal structure work? Are you able to do a transition and closing the gap by helping them understand if you can or can't, I think can be the difference between a great acquisition or one where both sides kind of just dance around what they're looking for and nothing really happens. But like you said, Ranier, every buyer asks these questions. Why are you selling? It's usually the first question. So having a good, honest answer to that I think is key. And then also really knowing, can you do a transition? Can you stay in the company for another 6 months or a few months or longer than that? Because that can also help you get a higher price when you exit. But if you can't, why not? And, you know, being able to articulate, communicate these things I think is key for buyers so they can put together an offer and deal that really works for both sides.
